A Medical Device Daily
CardioTech International (Wilmington, Massachusetts), a developer of advanced materials and medical devices for the treatment of cardiovascular and other diseases, said it has agreed to sell its Gish Biomedical (Rancho Santa Margarita, California) subsidiary in a stock transaction to Medos Medizintechnik (Stolberg, Germany) for about $7.5 million.
Medos is a developer of medical devices for cardiac surgery, extracorporeal membrane oxygenation (ECMO) and ventricle assist devices (VAD).
Of the purchase price, $1 million will be held in a one-year cash escrow to fund CardioTech’s post-closing indemnification obligations to Medos, if any.
After estimated transaction costs of $500,000 and the escrow funding, CardioTech expects to realize about $6 million in cash from the sale. The terms provide that CardioTech retains all cash on Gish’s balance sheet. The sale of is expected to close on or about July 9.
“The sale of Gish provides Medos with an excellent opportunity to enter the U.S. market,” said CardioTech president/CEO Michael Adams. “The sale will permit the redeployment of capital into our ongoing growth initiatives focused on selling complex medical devices, and licensing and selling specialized materials to medical device manufacturers.”
He said it allow CardioTech “to direct management expertise and resources into executing the company’s strategic growth plan.”
“The acquisition of Gish represents an excellent opportunity to achieve a significant position in the U.S. market for disposable medical products used in cardiopulmonary surgery,” said Dr. Thomas Theisen, chief sales officer of Medos. “Buying Gish also provides a solid platform for selectively introducing Medos’ innovative products from the ECMO and VAD product lines to the U.S. market using the well respected Gish brand. Medos has the structure to capitalize on combining two strong R&D programs in the global medical device marketplace.”
In February, CardioTech reported its plans to sell Gish, with Adams saying at the time that Gish was “not a fit with CardioTech’s strategic direction (Medical Device Daily, Feb. 16, 2007).
CardioTech acquired Gish in March 2003 (MDD, March 10, 2003)
Manor Care (Toledo, Ohio) reported that following a review of alternatives, its board has approved a transaction with global private equity firm The Carlyle Group to take the company private in an all-cash transaction of about $6.3 billion.
Manor Care shareholders will receive $67 in cash for each share of common stock owned, a 20% premium to Manor Care’s closing stock price of $55.75 on April 10, prior to the company’s April 11 report that it was evaluating alternatives.
Paul Ormond, president/CEO and chairman of Manor Care, said, “This transaction affords a significant cash premium to our shareholders while allowing the company to continue its strategic direction and commitment to quality care.
Completion of the transaction is contingent on approval by the company’s shareholders, receipt of necessary regulatory approvals, and fulfillment of other usual and customary closing conditions. Manor Care anticipates the closing to occur sometime in 4Q07.
Manor Care’s financial advisor is JPMorgan, and its legal advisor is Cravath, Swaine and Moore. Citi also provided certain financial advisory services to the board of directors of Manor Care in connection with the transaction.
The Carlyle Group’s financial advisors are Morgan Stanley, Credit Suisse and Banc of America Securities, and Latham & Watkins is legal advisor.
Manor Care, through its operating group HCR Manor Care, is a provider of short-term post-acute services and long-term care. The company’s employees provide care for patients and residents through a network of more than 500 skilled nursing and rehabilitation centers, assisted living facilities, outpatient rehabilitation clinics, and hospice and home care agencies.
In other dealmaking news:
• Tenet Healthcare (Dallas) reported that a company subsidiary has completed the previously disclosed sale of Roxborough Memorial Hospital (Philadelphia), a 137-bed acute care hospital, and Warminster Hospital (Warminster, Pennsylvania), a 153-bed acute care hospital to Solis Healthcare (Philadelphia).
Pre-tax proceeds from the sale are about $25.5 million, structured as $15.5 million in cash, which will be used for general corporate purposes, and a $10 million note due in December 2009. Solis Healthcare, led by healthcare veterans Robert Souaid and Jack Donnelly, was formed to acquire the two hospitals.
Tenet said it has now completed the sale of 11 of 13 hospitals the company had previously announced for sale.
In other news from Tenet, the company said that one of its subsidiaries has completed the purchase of Coastal Carolina Medical Center (Hardeeville, South Carolina), a 41-bed acute care hospital from LifePoint Hospitals (Brentwood, Tennessee) for about $35 million, subject to normal post-closing adjustments.
LifePoint said the proceeds from the sale will be used to pay down a portion of its outstanding debt.
Tenet said it intends to continue operating Coastal Carolina as a community hospital and will seek to enhance services in coordination with its nearby Hilton Head facility.
Coastal Carolina will become a part of Tenet’s Southern States Region and will maintain a local management team. The hospital’s CEO will report to Elizabeth Lamkin, the CEO at Hilton Head Regional Medical Center. It will continue to operate under its current name.
Tenet, through its subsidiaries, owns and operates acute care hospitals and related health care services.